The state’s prevailing wage law is forcing Peabody to spend nearly $700,000 more than the city otherwise would have on a new five-year agreement with a trash hauler, according to city Finance Director Patti Schaffer.

Mayor Michael Bonfanti recently called the law “another detrimental, unfunded mandate” that sent cost-saving strides the city had made in its dealing with JRM Hauling & Recycling “right down the damn toilet.”

“We’re being held accountable for a contract in which we have no stake,” Schaffer said. “It makes no sense to me.”

JRM was selected out of four companies that responded, and Peabody was pleased with its new deal because it would have kept the city’s costs basically the same but substantially enhanced service, particularly recycling. Though the new contract is still to be signed, JRM has agreed to pick up residents’ home recycling every week, instead of every other week.

The new contract, however, triggered the prevailing wage adjustment. The law required Peabody to have the state set a wage and obligates JRM to pay it.

For Bonfanti, it’s another hurdle, in trying economic times, that the state has put before cities and towns.

“It’s unnecessary to spend this kind of money,” he said. “We can’t afford to do this stuff.”